Project Management
Reducing Project Duration
Trade-Offs and Project
Crashing
It is not uncommon to face the following situations
The project is behind schedule
The completion time has been
moved forward
Shortening the duration of the
project is called project crashing
RATIONALE FOR REDUCING
PROJECT DURATION
Time Is Money: Cost-Time Tradeoffs
Reducing the time of a critical activity usually
incurs additional direct costs.
Cost-time solutions focus on reducing (crashing)
activities on the critical path to shorten overall
duration of the project.
Reasons for imposed project duration dates:
Time-to-market pressures
Unforeseen delays
Incentive contracts (bonuses for early completion)
Imposed deadlines and contract commitments
Overhead and public goodwill costs
Pressure to move resources to other projects
OPTIONS FOR ACCELERATING
PROJECT COMPLETION
RESOURCES NOT RESOURCES
CONSTRAINED CONSTRAINED
Adding resources Fast-tracking
Outsourcing project Critical-chain
work Reducing project
Scheduling overtime scope
Establishing a core Compromise quality
project team
Do it twice—fast and
then correctly
PROJECT COSTS
Project Indirect Costs
Costs that cannot be associated with any
particular work package or project activity.
Supervision, administration, consultants, and
interest
Costs that vary (increase) with time.
Reducing project time directly reduces indirect
costs.
Project Direct Costs
Normal costs that can be assigned directly
to
a specific work package or project activity.
Labor, materials, equipment, and subcontractors
Crashing activities increases direct costs.
TIME-COST TRADEOFF
Minimum cost = optimal project time
Total project cost
Indirect cost
Cost ($)
Direct cost
Crashing Time
Project duration
REDUCING PROJECT DURATION
TO REDUCE PROJECT COST
Identifying
Identifyingdirect
directcosts
coststo
toreduce
reduceproject
project time
time
Gather
Gatherinformation
informationabout
aboutdirect
directand
andindirect
indirect
costs
costsof
ofspecific
specificproject
projectdurations.
durations.
Search
Searchcritical
criticalactivities
activitiesfor
forlowest
lowestdirect-cost
direct-cost
activities
activitiesto
toshorten
shortenproject
projectduration.
duration.
Compute
Computetotal
totalcosts
costsfor
forspecific
specificdurations
durationsand
and
compare
compareto
tobenefits
benefitsofofreducing
reducingproject
projecttime.
time.
PROJECT COST–DURATION GRAPH
• Find total direct costs for
selected project durations.
• Find total indirect costs for
selected project durations.
• Sum direct and indirect costs for
these selected project durations.
• Compare additional cost
alternatives for benefits.
PROJECT CRASHING
• Crashing
– reducing project time by expending additional resources
• Crash time
– an amount of time an activity is reduced
• Crash cost
– cost of reducing activity time
• Goal
– reduce project duration at minimum cost
Factors to Consider When
Crashing a Project
The amount by which an activity is crashed is, in
fact, permissible
Taken together, the shortened activity durations
will enable us to finish the project by the due
date
The total cost of crashing is as small as possible
Steps in Project Crashing
1. Compute the crash cost per time
period. If crash costs are linear over
time:
Crash cost (Crash cost – Normal cost)
per period =(Normal time – Crash time)
2. Using current activity times, find the
critical path and identify the critical
activities
Steps in Project Crashing
3. If there is only one critical path, then
select the activity on this critical path
that (a) can still be crashed, and (b)
has the smallest crash cost per period.
If there is more than one critical path,
then select one activity from each
critical path such that (a) each
selected activity can still be crashed,
and (b) the total crash cost of all
selected activities is the smallest. Note
that the same activity may be common
to more than one critical path.
Steps in Project Crashing
4. Update all activity times. If the desired
due date has been reached, stop. If
not, return to Step 2.
Crashing The Project
Time (Wks) Cost ($)
Crash Cost Critical
ty Normal Crash Normal Crash Per Wk
A 2 1 22,000 22,750 750 Yes
B 3 1 30,000 34,000 2,000 No
C 2 1 26,000 27,000 1,000 Yes
D 4 2 48,000 49,000 500 No
E 4 2 56,000 58,000 1,000 Yes
F 3 2 30,000 30,500 500 No
G 5 2 80,000 84,500 1,500 Yes
H 2 1 16,000 19,000 3,000 Yes
Crash and Normal Times
and Costs for Activity B
Activit
y Cost
Crash
Crash Cost – Normal
$34,000 — Crash
Cost/Wk = Cost
Cras $33,000 — Normal
$34,000 Time – Crash
– $30,000
h = Time
3–1
Cost $32,000 —
$4,000
= = $2,000/Wk
2 Wks
$31,000 —
$30,000 —
Norm
al
Norma —
l Cost
| | |
1 2 3 Time
Figure 3.16 (Weeks)
Crash Normal
Time Time
Project Crashing: Example
2 4
12
8
7
1 4
12
3 6
4 5 4
4
Project Crashing: Example (cont.)
$7,000 –
$6,000 –
Crash cost
$5,000 – Crashed activity
Slope = crash cost per week
$4,000 –
$3,000 – Normal activity
Normal cost
$2,000 –
$1,000 –
Crash time Normal time
| | | | | | |
–
0 2 4 6 8 10 12 14 Weeks
Normal Activity and Crash Data
TOTAL
NORMAL CRASH ALLOWABLE CRASH
TIME TIME NORMAL CRASH CRASH TIME COST PER
ACTIVITY (WEEKS) (WEEKS) COST COST (WEEKS) WEEK
1 12 7 $3,000 $5,000 5 $400
2 8 5 2,000 3,500 3 500
3 4 3 4,000 7,000 1 3,000
4 12 9 50,000 71,000 3 7,000
5 4 1 500 1,100 3 200
6 4 1 500 1,100 3 200
7 4 3 15,000 22,000 1 7,000
$75,000 $110,700
$500 $7000
Project Duration:
2 4
$700
36 weeks
8 12
7
1 4 FROM …
12
$400 3 6
4 5 4
4 $200
$3000
$200
$500 $7000
2 4
8 12 $700
7
TO… 1 4
7
Project Duration: $400 3 6
31 weeks 4 5 4
Additional Cost: 4 $200
$3000
$2000 $200
PROJECT MANAGEMENT
Project Crashing with
Multiple Objectives
MULTIPLE OBJECTIVES
• Project Cost and Time are,undoubtedly the
two major objectives that project managers
strive to minimize and control.
• Project performance (in terms of both
quantum and quality of work done) needs to
be monitored and controlled.
• There could be a number of attributes that
reflect project performance, time & cost.
CONFLICTING OBJECTIVES
• Meeting a certain contracted date.
• Minimizing the total project cost
– Direct activity costs
– Indirect project cost
– Penalties for project delays
• Ensuring that certain activities are not crashed
for quality reasons.
• Confining the expenses to a fixed budget
SOME CONSIDERATIONS
• Project Cost curve defines the feasible ranges
of duration and cost.
• There may be different penalty costs for delay
beyond a contracted completion.
• Additional considerations of quality and safety
may prevent us from adopting the least costly
schedule or from crashing certain key
activities.
GOAL PROGRAMMING - I
• The goal programming approach allows us to
handle multiple conflicting objectives of the
kind just considered.
• We need to prioritize our objectives
appropriately and express them in terms of
deviational variables.
• These deviational variables are linked to our
objectives through goal constraints.
COST–DURATION TRADE-OFF
EXAMPLE
The Table below presents normal and crash times and costs
for each activity, the computed slope and time reduction
limit, the total direct cost, and the project network with a
duration of 25 time units. Note the total direct cost for the
25-period duration is $450. The indirect cost for 25 days is
$400 and crashing of one day saves $50.
COST–DURATION TRADE-OFF
EXAMPLE
The Table below presents normal and crash times and costs
for each activity, the computed slope and time reduction
limit, the total direct cost, and the project network with a
duration of 25 time units. Note the total direct cost for the
25-period duration is $450.
COST–DURATION TRADE-OFF
EXAMPLE (CONT’D)
COST–DURATION TRADE-OFF
EXAMPLE (CONT’D)
COST–DURATION TRADE-OFF
EXAMPLE (CONT’D)
SUMMARY COSTS BY
DURATION
PROJECT COST–DURATION
GRAPH
Practice Question
Given the data and information that follow, compute
the total direct cost for each project duration. If the
indirect costs for each project duration are $90 (15
time units), $70 (14), $50 (13), $40 (12), and $30 (11),
compute the total project cost for each duration. What
is the optimum cost-time schedule for the project?
What is this cost?
Practice Question
Use the information contained in next slide to compress one
time unit per move using the least cost method. Reduce the
schedule until you reach the crash point of the network. For
each move identify what activity(ies) was crashed, the
adjusted total cost, and explain your choice if you have to
choose between activities that cost the same.
If the indirect cost for each duration is $1,500 for 17 weeks,
$1,450 for 16 weeks, $1,400 for 15 weeks, $1,350 for 14
weeks, $1,300 for 13 weeks, $1,250 for 12 weeks, $1,200 for
11 weeks, and $1,150 for 10 weeks, what is the optimum
cost-time schedule for the project? What is the cost?
